All- 

Thanks for all of the help about 7 months ago when I bought my dream home!!  You guys save me a few thousand dollars... and to this day I'm greatful.

But... I'm back for more guidance :)

Like most who have VA loans, I've been slammed with refi offers.  Well, being ignorant, I've called a few to try to get smarter.  Well.. here is my current situation:

1. We financed about $389K in March when we bought the home. 

2.  The rate was 5%, and the payments that result are acceptable (meaning we don't have a ton of money left over, but we aren't cash strapped either).

3.  I understand that having good payment status with VA backing, if the right deal came along we could get one fairly easily.

4.  I've just been offered a 5/1 ARM with the rate starting at 4%.  That, in my less educated (then you all) mind, would give me 5 years of saving $325 a month - and one year (5 years from now) at 5%.  From there - the most it would ever go to was 9%, when I had paid down some of the mortgage, correct?

So, I think I need help with 2 things.

1.  If I was given a 'fair' deal, this business case analysis looks fairly good (I'm expecting to be in a better financial position 6 years from now than I am now).

2.  What are some of the costs that I need to look for in the fine print of a Refi, and what is accpetable on something like that?

Or am I nuts to even be wasting my time here?  Getting 2 payments off from paying the mortgage plus saving $300 a month from now until the year 2015 sounds good, but is it really?

Thanks for any help...

Bob

I would say you have a great rate currently @ 5% and I would not refinance into an ARM.  Just my opinion.

P.S. I only lend in the state of Florida.

Bob, before you do somthing like this, ask yourself if it would be wise to "buy" (refi) 5 years of certainity and give up your current 30 years of certainity???

No, way would I reccomend this tradeoff.

Louis

Robert Sholtis:

Getting 2 payments off from paying the mortgage

There is no free lunch. The interest for those 2 months (about $2,900) will be paid when you close or added to the loan amount.

VA Funding Fee (unless you have a service connected disability and are exempt) 0.50% = $1,945

So you're up to almost $5,000 in cost and we haven't even started to talk about other closing costs.

The only way this might make sense is if you were absolutely certain you were moving in less than 6 years.

Thanks all!!  I appreciate the guidance.  We are in our dream home.. and will be there awhile.  While we may have the resources 6 years from now not to worry about the imact of the ARM, I did want the 'impact' of.  Now knowing, we'll wave off...

Thanks again..

Bob